Amgen Inc. (AMGN) Q3 2010 Earnings Report, Transcript and Summary

Arvind Sood - Vice President of Investor Relations George Morrow - Executive Vice President Roger Perlmutter - Executive Vice President of Research & Development James Daly - Kevin Sharer - Chairman of the Board, Chief Executive Officer, Chairman of Executive Committee and Member of Equity Award Committee Robert Bradway - President and Chief Operating Officer Jonathan Peacock - Chief Financial Officer

Geoffrey Porges - Bernstein Research Robyn Karnauskas - Deutsche Bank AG Joel Sendek - Lazard Capital Markets LLC Ian Somaiya - Piper Jaffray Companies Yaron Werber - Citigroup Inc Maged Shenouda - Stifel, Nicolaus & Co., Inc. Christopher Raymond - Robert W. Baird & Co. Incorporated Michael Yee - RBC Capital Markets Corporation Steve Yoo - Leerink Swann LLC Eric Schmidt - Cowen and Company, LLC Eun Yang - Jefferies & Company, Inc. Mark Schoenebaum - ISI Group Inc. Gene Mack - Soleil Securities Group, Inc. Rachel McMinn - BofA Merrill Lynch Geoffrey Meacham - JP Morgan Chase & Co

My name is Christian, and I will be your conference facilitator today for Amgen's Third Quarter 2010 Financial Results Conference Call. [Operator Instructions] I would now like to introduce Arvin Sood, Vice President of Investor Relations. Mr. Sood, you may now begin.

Okay, thank you, Christian. Good afternoon, everybody. I would like to welcome you to our third quarter results conference call. We have another productive quarter behind us, as we get into the home stretch for the year. This has been one busy year, and there are important events remaining going into the last couple of months. So we are going to try a slightly different format for our call today. Many of you have commented in the past that you have appreciated the details [ph] for our calls. And yes, I believe that a certain amount of redundancy has crept in our prepared comments compared to what's already detailed in our press release. Beginning with this call, we'll try to make this process more efficient without compromising the quality of the information or the opportunity to have a dialogue. In our prepared comments today, we'll focus only on those comments that provide added clarity on issues outlined in our press release. We'll continue to provide slides as we have in the past as they serve as good reference tool, and a link to these slides has been sent separately. So with that, I would like to introduce our presenters. I'm joined today by our Chairman and CEO, Kevin Sharer, who will lead the discussion by providing a strategic review of our business. Following Kevin, you'll hear from our recently appointed CFO, Jon Peacock, who will highlight key aspects of our financial performance during the quarter. Our President and Chief Operating Officer, Bob Bradway, will then give you a high-level summary of our global commercial sales as well as a report on full year commercialization. Our Head of R&D, Roger Perlmutter, will conclude our prepared comments by providing a regulatory and pipeline update. As of the case in such calls, our comments today are only governed by our Safe Harbor statements. What it states in summary is that through the course of our presentation today, we may make certain forward-looking statements and actual results could vary materially. So with that, I would like to turn the call over to Kevin.

Thanks, Arvind, and good afternoon. Thank you, all on the call for joining us. I'd like to make a few comments about our business as kind of a higher level before I turn the mic over to Jon. Overall, I think we had a solid quarter, as we build the foundation for top line growth and invest for the future. Jon Peacock, our new CFO, will comment more fully, but I do note the growth on operating expenses compared to last year. We had an unusually low R&D quarter last year and a few other onetime unfavorable comparisons. I want to reinforce that we manage here very efficiently, and these quarter-over-quarter comparisons are not an indication of this approach has or will change. Bob will lead the discussion of the Prolia experience to date, but I'd like to make a few comments first. Forecasting the growth ramp of any new product is a challenge. That said, we hear in independent surveys reinforced the attractiveness of Prolia in physician's eyes to treat osteoporosis for significant numbers of patients. Doctors and their offices are working to become accustomed to the new reimbursement dynamics Prolia often represents for them. Once this reimbursement process is mastered and they gain experience, I'm confident usage will be significant. We look forward to the PDUFA date of November 18 for Denosumab oncology and the AMG 147 results near year end. We cannot predict what will happen November 18, but I am very confident in the medicine. I am especially proud of our Cardiac team and the high-quality and scientific discussions the panel conducted that day. That was all of us in the medicines development, review and regulatory areas at our best. Finally, I would like to welcome Jon in his new role, and Bob's report after a full quarter in his new role. Jon, over to you.

Thanks, Kevin. I'll briefly review the P&L and balance sheet to provide a perspective on performance in the quarter. Overall, our revenues were $3.8 billion at the same level as the third quarter in 2009. Bob will take you through the drivers of product sales in a few minutes. You'll also see that other revenues were down versus a year ago. This is primarily due to the lower partnership income following the PROCRIT recall. Commenting on the P&L as a whole, net income declined 14% while our revenues were flat. Kevin highlighted this, and there were two primary reasons for it: The first is that R&D costs, as Kevin mentioned, were unusually low in the third quarter of 2009, but this primarily was used in cost recoveries and true-ups on development projects last year. Our R&D costs this year and the most recent quarter of 18.3% of sales are broadly in line with our normal run rate. The second reason was the tax rate. Quarter three 2009 benefited from tax cases settled in the quarter and the release of some related provisions. The tax rate of 19.1% in 2010 is again more in line with our normal run rate. Let me comment briefly on the rest of the P&L. Cost of sales were one point higher than a year ago, roughly half of this was due to inventory write offs as a result of the EPOGEN and PROCRIT recalls. The rest was largely due to higher bulk unit material costs. SG&A spending increased 3% versus a year ago due to promotional activities to support Prolia and some high litigation expenses. Relative to net income, adjusted EPS benefited from buybacks during the year, which I'll comment on as we review cash flow. So moving to the balance sheet on the next page. We ended the quarter with $17 billion in cash, up $3 billion versus a year ago and $13.7 billion of debt, up $2.5 billion. This increase in debt results from our two debt offerings over the course of this year in advance of the $2.5 billion convertible that matures in February of 2011. I also wanted to comment on cash flow from operations, which was $1.3 billion in the third quarter. This is down by around $700 million year-over-year, and this is substantially driven by the timing of tax payments to the U.S. tax authorities. Finally on the quarter, share repurchases were $6.6 million at a cost of $400 million, bringing the cost of our cumulative repurchases in 2010 to $2.7 billion. And so in closing, a few remarks on outlook. Firstly, we're re-affirming our full year guidance on revenues at slightly below $15.1 billion and adjusted EPS towards the lower end of $5.05 to $5.25. Secondly, a reminder that consistent with prior-year spending patterns, Q4 operating expenses will be higher relative to the first three quarters. This is due to the timing of a number of our promotional and development projects activities. Finally, we expect the tax rate for the full year to be around 20%. If the federal R&D tax credit is renewed, it could be marginally lower than that. And then finally, one comment related to 2011. As some of you might have seen in the press, the Puerto Rico government introduced and signed new tax legislation over the weekend. We understand that any tax imposed by this legislation on U.S. taxpayers will be creditable against U.S. income taxes, thereby minimizing the impact to U.S. companies. However, legislation is complex. It's just been introduced, and we'll be evaluating its impact on our Puerto Rico activities in the weeks ahead. So with that, I'll hand over to Bob.

Thank you, Jon. I'd like to provide a high-level summary of our global commercial performance for the third quarter and offer a few perspective comments on the fourth quarter as well. Our product-by-product details are contained in the remainder of our slide material and in the press release. For the sake of brevity, I won't present this material, but I would also like to note that Jim Daly and George Morrow are here with us on the call, and together, we would be happy to answer product-specific questions during the Q&A period. For the year-on-year comparison, our global product sales grew by $23 million or about 1%, which reflects a few key factors: First, our U.S. [indiscernible] sales were up by $45 million or about 5% on the quarter, this after the effects of U.S. Health Care Reform. In addition, our products that are in an earlier stage of their life cycle, and in particular, Sensipar, Vectibix, Nplate and Prolia globally grew by $61 billion or about 24%. Offsetting this growth were factors including our global Aranesp franchise, which dropped by about $62 million or 9% on the quarter. And in addition, I want to note that we booked accruals for U.S. Health Care Reform of $64 million for the quarter. And as you will recall, our year-to-date Health Care Reform accruals due to the second quarter were $69 million. So you can see the predicted ramp up continues as each element of Health Care Reform is implemented. And looking ahead to the remainder of 2010, as you've heard from Jon, we've reiterated our revenue guidance. And I wanted to suggest that when you think about the fourth quarter, bear in mind that we are expecting a growing impact from the ESA REMS program in the U.S. and we expect to see some impact from dialysis providers as they prepare for the bundled reimbursement environment. Turning to Prolia, let me provide you with some additional perspective on the launch. As we discussed on our call in July, market feedback continues to indicate that there is a substantial unmet need in osteoporosis, and we are confident that Prolia can address this need. In the U.S., our objective is to establish a positive experience with Prolia in a select audience of specialists and high prescribing primary care physicians. Specifically, we're trying to help these physicians to understand the clinical importance and relevance of Prolia and to help them successfully navigate the reimbursement process to facilitate broader adoption. I can tell you in my new role as Chief Operating Officer, I've spent considerable time with Jim, George and Helen Torley and their teams in the Prolia launch, and I think all of us feel we're making steady progress in addressing the key drivers of Prolia's uptick. I've also spent enough time with the regional and district managers, as well as reps in the field to know that while we are finding no major surprises in the launch environment, discussions with healthcare providers are taking a bit longer for Prolia as a new biologic with a noble mechanism [ph] of action than what we would find with the traditional launch. On balance, we're encouraged by the response so far from physicians who have adopted Prolia. Now from a patient perspective, the majority of current Prolia patients were previously on bisphosphonates, but we're also seeing a number of patients who were at high risk for fracture and who are receiving Prolia as their first postmenopausal osteoporosis treatment. Patient out-of-pocket costs are obviously a key factor in growth selection in osteoporosis, and we estimate when we look at the universal Prolia patients that approximately 80% of them are Medicare eligible and 20% are covered by commercial plans. For Medicare patients, until the Part D Plans make there formulary decisions in early 2011, access through Part B buy and bill represents the preferred channel for patients because it was all [indiscernible] out-of-pocket costs. So far, about 80% of Prolia use has been through buy and bill. As we expected, some physicians are taking a wait-and-see approach to buy and bill until a reliable timely reimbursement has been clearly established. All 15 Medicare Administration Contractors (sic) [Medicare Administrative Contractor] or MACs, have by now confirmed medical coverage for Prolia, and through the end of the third quarter have issued paid claims in each of these 15 MACs. This is important as it enables our sales representatives to return to physicians who initially deferred the buy and bill and present evidence to them of successful reimbursement by their Medicare Administration Contractors. Although the adoption of Prolia so far among specialists is high, when we look at the universal prescriber so far, 60% of them have been primary care physicians. And this mix simply reflects the fact that the majority of PMO prescribers, and indeed, Prolia's targeted physicians are primary care doctors. For those primary care physicians and some specialists who have yet to adopt buy and bill, we expect utilization of the pharmacy benefit channel to increase early in next year as Part D and commercial coverage expands. Turning to Prolia in Europe. Germany and Denmark are the first markets where we've achieved full reimbursement, and we are encouraged by the positive leading indicators in these markets. We've received preliminary notice of reimbursement for Prolia by NICE in the U.K., and in December, we expect reimbursement and launch in Australia. These two markets are the most rigorous in the world when it comes to health technology assessments, and were pleased with their preliminary endorsements. Recall in 2011, we expect to have full reimbursement in 2/3 of our European market by value when we launch in France, Italy and Spain. So while it's still early days, I'd reiterate our confidence in Prolia's ability to address an important unmet medical need in osteoporosis. Now let's turn to Roger, who will update us on the pipeline.

Thanks, Bob. So it was another busy and very productive quarter for research and development with important regulatory activities and development programs coming into focus. We also participated in a number of medical meetings, including the European Society for Medical Oncology where we presented the integrated analysis of all three Denosumab skeletal related events studies, which demonstrated superiority over zoledronic acid in delaying both the time of the first SRE and also to multiple SRE. At the American Society for Bone and Mineral Research, we had the opportunity to present data from postmenopausal osteoporosis patients after five years of Prolia therapy, demonstrating continued efficacy with long-term Prolia treatment. As noted on the site, we've been engaged in very productive discussions with the FDA on the Denosumab skeletal related events file. Kevin mentioned that PDUFA action date is November 18, and the FDA appears to be very, very engaged in this. I'd remind you, it's quite a large file, one and a half million pages. There's an enormous amount of work that has to be done, but we're pleased with the nature of the interactions and things are moving forward. Also, as Kevin noted, the 147 study, which compares the treatment effect of Denosumab with placebo in terms of prolonging bone metastasis-free survival in men with hormone refractory that is androgren independent prostate cancer. That study is nearly complete. We're in the process of validating the data, and we remain on track to have the results in hand by the end of year. We also recently participated in the cardio renal advisory committee meeting where we discussed the results of the TREAT study. Kevin mentioned that as well. I thought that it was a very productive discussion, which informed how the TREAT study really reveals the benefits and risks of DSAs and chronic kidney diseased patients. We will continue to work with the Food and Drug Administration on our proposed label updates to try and make sure that these new lessons are incorporated to our label. And as most of you know, we've completed our Phase III programs in first and second line metastatic colorectal cancer for Vectibix, and we've already filed in the European Union for these indications. We will now submit our application with the FDA in the very, very near future. Because KRAS mutations are predicted biomarker for a reduction in efficacy for Vectibix, our filing will also be tied to an application for a KRAS diagnostic test kit. We've been working closely with our partner [indiscernible] in the development of this, and all this will be filed together, as I say, very soon. More broadly, I should mention that our clinical programs continue to advance and we're looking forward to presenting these materials at the business review next year. Kevin?

Okay, thanks, Roger, and thanks, everybody else. I just like to summarize a few things. Our base business continues to perform well. We feel good about that, it gives us confidence. Bob made an extensive set of comments about Prolia, and my takeaway from that is we're making steady progress and the need is high. Our pipeline does continue to advance in our many exciting molecules that we look forward to talking with you more about. In that regard, we're certainly confident in our ability to continue to deliver for shareholders. And as part of our communication with you, what we will do is conduct a business review meeting for investors in the first half of 2011. We'll set that date before the end of this year so you can mark your calendars. We look forward to being with you then. And with that, I'll turn it over to Arvind and we can take your questions.

Okay thanks, Kevin. Christian, why don't we go ahead and open it up for Q&A.

[Operator Instructions] Our first question comes from Josh Schimmer with Leerink Swann.

This is Steve Yoo calling in for Josh. I was wondering if you could tell us if you expected any other actions by the FDA or CMS on the ESA franchise? And if so, when?

With respect to FDA interactions, we have proposed to the FDA that there should be a set of changes the label to provide better information to prescribers and patients about the extensive risk profile of ESAs and setting of chronic kidney disease for patients not on dialysis. We expect those discussions to continue, and ultimately, we will incorporate new information beyond what we've already done this year into our label. Frankly, you know, CMS is engaged in national coverage analysis. They have said that, that will lead ultimately to a national coverage decision, and we do expect that at some point, there will be changes. But we don't have any information about when that would take place.

Our next question is from Michael Yee with RBC Capital Markets.

When you look at your EPOGEN numbers this quarter, and you sort of alluded to the bundling impacts and that starting to happen, what do you think is going on in terms of utilization and volume specifically? And how do you think the impact of bundling will happen now and through 2011?

Sure, Michael. First question is what components of growth for EPOGEN in the third quarter? I think the single most important component was dose, and we did see a dose decline of 4% in the third quarter year-over-year versus dose stability in the second quarter of this year. Now that was anticipated. It is built into our guidance, and we anticipate seeing that dose decline further in the fourth quarter, modestly, as providers prepare for bundling at the beginning of 2011.

Our next question is from Geoff Meacham with JPMorgan. Geoffrey Meacham - JP Morgan Chase & Co: Had a couple of part question on Prolia. Just wondering if you can give us any metrics, either a number of specialists or PCPs writing a script, or maybe on the payer side, other metrics like private payers making a coverage decision or those you have to do so?

Geoff, it's Kevin. I understand the question and the desire for really kind of micro level detail, but right now, let's just leave it at the broad sweep that we gave thousands of physicians have prescribed the medicine worth bringing. The insurance companies are online. As we get more experience, we'll probably be able to be more forthcoming here. But I think at this early stage, I'd rather leave it where we are then try to get in to maybe a little bit [ph] on our side of false precision, but thank you for the question.

Our next question is from Yaron Werber with Citi.

Roger, we're getting a lot of questions these days on what to expect on November 18, and you guys were very helpful and said a few comments. But any sense as to why FDA has not convened the panel for Dmab and [indiscernible]? Any thoughts would be useful.

Yaron, as you know, the decision to convene a panel is completely the FDA's decision. There's no obligation. There's no requirement that a panel be convened for a supplementary Biologics License Application. We submitted the file. FDA reviewed it and granted it priority review. A lot of work to be done on that file, and I think they made the decision that they need to do that work. And at the moment, they haven't informed us of the need for an advisory committee, that of course, they could always decide that they wanted to change that and drill into it in more detail. But at the moment, that was their decision.

Our next question is from Robyn Karnauskas with Deutsche Bank.

So Kevin, we noticed that your cash is accumulating. I was wondering if you could give us some timeline for your plans for utilizing that cash, especially when JPMorgan last year, you said that you'd be opportunistic and aggressive as far as potentially using it or making an acquisition this year?

I'd like to note that's Amgen's cash, but yes, I felt pretty good there for a minute. Yes, we are in a place where most predict that we'll build up some cash over the next few years, and I think that anything that we do that's in the line of using that cash will be, first and foremost, a return to shareholders. We've had a strong history of that. I've asked Jon in his new role to think about that. The other thing is we're always on the lookout for opportunities to improve our product pipeline, increase topline growth and to bring us into some of the markets, particularly the emerging markets in Japan where we don't currently have operations on the ground. And so hard to say when and whether and how those things might come about. But that's what we're on the lookout for. And with Jon aboard, he'll help us do that, with Bob, me, Roger, the rest of us. But that's what we want to do. We want to make smart use of that cash to return it to shareholders and build the business strategically.

Our next question is from Mark Schoenebaum with ISI Group.

I was just wondering, on the prevention data, Roger, I'm not going to ask you to comment on probability of success, I know that's hard. But can you help us or maybe run through the argument that a delay in time to bone met is an approvable endpoint in light of maybe what's happening with some of the other drugs that have gone in front of the FDA for just the progression radiologic endpoints?

Yes, I mean, Mark, there's no doubt, and time doesn't permit us to go through this in enormous detail. But there's no doubt that the emergence of clinically apparent metastatic disease in the bone is a great prognostics sign and is associated with a variety of adverse events in bone. We've had a lot of discussions with the agency about this. And if the 147 study, of course, the data will become available this quarter, does show a substantial effect in terms of this delay, I think that, that would be clinically very meaningful to patients, to physicians, and ultimately, that will be viewed that way by regulatory agencies. Of course, I would expect that there would be a lot of discussion, but I don't doubt that, that would be viewed as important.

And our next question is from Geoff Porges with Bernstein.

Bob, you said that adoption of Prolia among specialists is high, but it's a little hard to see that when, by my calculation, you've had about 16,000 patients receive the drug out of over 3 million a month who were getting prescriptions for osteoporosis medicines. So could you give us some sense, and maybe George could chime in on this, on what we should be calibrating our market share outlook to be, say, a year, a couple of years from now? I don't want you to give us a forecast, but you're under half a percent of the markets for the quarter in which you launched. So where does it go from here and how long does it take?

Sure, Geoff. Let me just give you a general sense of what I'm trying to convey. First, as I've indicated, we think the uptake with specialists has been encouraging, Geoff. We've seen various independent reports of the percentage of specialists that are using Prolia with their new and existing previously treated patients. As Kevin said earlier, we want to resist getting into the detail. We are now still very early days. But I also want to give you a sense that while specialists have taken up Prolia, and of course they're more familiar in particular with the buy and bill environment than primary care physicians, it is still the primary care physicians that are generating 60-plus percent of the prescriptions for Prolia use. And again, with respect to the longer-term question, Geoff, let me ask Jim and George to share their perspective with it.

Sure, Geoff. Let's take a look at rheumatologist first. We have about 2,800 rheumatologists. To date, we think we have about 1,200 who prescribed. So we feel good about that. One reality in the marketplace is it takes time for patients to get access to rheumatologists. The waiting lists are long. So on that front, our primary objective right now is to push on depth and prescribing. And we think we have an opportunity to do that as reimbursement becomes more timely and more reliable. Now with respect to primary care physicians, clearly, we have an opportunity to push both on the breadth of prescribing to gain more primary care physicians as well as the depth of prescribing.

George, you've been out there. We've asked you to spend time just kind of talking to the physicians being kind at the field level. Maybe for shareholders, you can just comment on your general impressions.

Yes, I think, by and large, the launch is unfolding the way I thought it would. We had three goals, Kevin, as you remember, at the November analyst day a couple of years ago that we outlined. The first was to establish a compelling clinical profile, and I think we've made a really good progress on that front. Doctors like the clinical profile and they're keen to use the product. The second goal was to make it affordable for patients. And Medicare Part B is really accomplishing that goal, and that there's little to no co-pay for most of the patients. So the good news is patients aren't coming back, saying, "oh my god, it costs this much at the pharmacy and I can't afford it." So I think we've created the rights of impression about the affordability of the product. And the last is, and probably the most difficult launch challenge we knew going in was, make it easy to access, it's the so-called fulfillment process that's easy for physicians, their office staff and patients. And it's working for physicians who are willing to buy and bill, but most primary care physicians are not willing to buy and bill at this point. So as a result, we've got a relatively small satisfied group of adopters, and my sense is that's going to grow over time with probably three drivers: The first being greater confidence in Medicare and commercialization reimbursement; second will be reassurement on safety of Prolia. It's not an issue, but given all that's happened in the marketplace over the last decade or so, doctors want to know that what they're using is safe, and I think, Roger, the long-term safety updates are going to be well received by doctors in the community. But most importantly, Part D Medicare coverage with reasonable co-pays is what I feel will create significant lift in our trajectory, our launch trajectory. Because the vast majority of primary care physician would much rather write a prescription the way they prescribe most other drugs and have the patient then take care of about getting that filled. So I think it's probably proving as positive to be a little more challenging in terms of the time it takes. But I think all signs are very positive for the future of this product.

Our next question comes from Eun Yang with Jefferies. Eun Yang - Jefferies & Company, Inc.: If I remember correctly, dialysis organizations have to decide whether to opt in to the bundle or phase in by November 1. So now we are getting closer to the November 1. Do you have any sense on larger Dallas organization on what to do?

Eun, this is Jim. You're absolutely correct. November 1 is the deadline for LBOs, large dialysis facilities, all dialysis providers to opt in. They will be opting at a facility level, and we do not have any reliable intelligence in terms of what their participation rate will be. But again, we all expect to know sometime after November 1.

Our next question comes from Eric Schmitt with Cowen and Company.

Maybe another question for Jim, also on EPO, I mean, the Street's all over the map in terms of expectations for this product in the post-bundled environment. You guys have said, you think the impact of bundling will be manageable or modest. I guess, wondering if you could start to put some range around expectations here and how exactly Amgen might be able to manage the impact.

Sure. I'll say what we are doing right now is we're listening very intensely to our customers. And what our customers are telling us is that, number one, they do not plan to shift to subcutaneous dosing. I think the providers have been fairly upfront that they don't see that as being in the best interest of their patients. It's clearly not consistent with our labeling. So they don't see that as a behavior shift as a result of bundling. They have indicated that they are going to investigate hypo responding patients more intensely to better understand underlying causes of the hyper-responsiveness, perhaps utilize IV vitamin, IV iron more intensely in those patients. But overall, they see the use of IV iron as being modest because most patients are iron replete at this time. So you put that together and some of the large dialysis centers have publicly stated that they are anticipating a dose impact of anywhere from 10% to 15%. So at this point in time, we think that's as a reliable an assumption as we have out there. And again, we intend to stay very close to our customers.

Our next question comes from Joel Sendek with Lazard Capital Markets.

My question has to do with the study 147 data timeline. I guess it sounds to me like it's going to come toward the end of the fourth quarter. Can you narrow it down anymore for us please?

Well, Joel, I can't give you much precision on this because we're engaged in the process of looking at set of thousands of queries where, for example, there'll be a clinical report, and that clinical report is not recorded in the data set at exactly the same time. So the query has to go out to the site and reconcile that all with the data set blinded. So all that stuff has to be resolved. We resolve all those queries. We get all of them taking place and we can lock the database, and the statistical analysis takes place. We're confident at this point that we have the requisite number of events, and I don't expect there will be any change in that as we proceed to the validation process. But we do need to answer all those queries. We can't lock the database until we do, and that requires time because it's just back-and-forth with the sites in this quick study. So we'll get it when we get it, and when the database gets locked, the statistical analysis takes place and I get a note, and shortly thereafter, so do you.

Our next question comes from Chris Raymond with Robert W. Baird. Christopher Raymond - Robert W. Baird & Co. Incorporated: Just a question on healthcare reform. I sense from your commentary on the impact, it sounds like you moderated a little bit the impact. I think your verbiage is less than $200 million. And I think before when you first laid that out, it was $200 million or $250 million. Could you maybe talk a little bit about what's driving that change? Was it anything fundamental? At one point will you be able to talk about 2011?

I'd say it's nothing fundamental. These are very complicated, multifactorial effects. And so it's just a matter of experience and time, and we can more narrowly gauge and understand the affect. It's nothing fundamental. And by the time we share our views of 2011 in January of next year, we'll be prepared to address the effects for that year. But it's becoming part of the fabric of the business, and we'll move ahead from there.

Our next question is from Ian Somaiya with Piper Jaffray.

Just a question on the Prolia launch. I guess if I go back and look at your comments that you made in the past two quarters, in second quarter, you stated that the Prolia launch is in line with your expectations. This quarter, the launch is unpredictable as most of these launches tend to be. And I guess, if you could help us think about -- if plan A doesn't work, sort of what is plan B? And how long do you take to fully give plan A sort of time to support the sales trajectory that you're hoping for?

I think that the only thing that we'd leave today and I think that Bob and Jim and George all share that is you break the launch into two pieces. What do the doctors and we think about the clinical profile and the need for this medicine in a big population? We're highly confident about that. It's taking longer than we would have imagined to get the reimbursement pattern to happen in a fully fluid way. And we've got Part D coming up. I'm not particularly worried that somehow our original plan is flawed. I don't think it is that all. It's just tough to predict the timing to product launches and how the changes in reimbursement will take. So we're confident that we'll be able to help the physicians through the various reimbursement dynamics and the clinical benefit of the medicine will then fully flow to the right patient. So we're good in terms of our understanding of what's happening and confident in the medicine. And in that regard, I'd like to acknowledge the really, really hard work of all the sales reps in the field and our regional medical liaisons who were bringing this message to the physicians and patients everyday. It's really, really outstanding work, and I deeply appreciate it.

Our next question is from Rachel McMinn with Bank of America Merrill Lynch.

I just wanted to clarify just the Part D commentary that you're making on Prolia. You're saying on the one hand that co-pays are great right now because patients really through Part D don't have to pay very much. I guess what will that look like with Part D? And will there be some sort of process that patients can get co-pay relief? And then just if I can sneak in a second question on REMS, you mentioned that REMS, we should be thinking about that as a negative pressure in the fourth quarter for ESAs and I was just wondering why we might expect more of a pressure in the fourth quarter if we haven't really seen much so far?

Let's take the Part D question first. The Part D providers are required to make a formulary decision six months after product approval. We're in discussions with the PDPs right now, so we expect them to have formulary placement in the early part of next year. And by early, we're talking about January through March. You probably won't see communications until the March timeframe. We will be negotiating for favorable tier placement. We would see favorable tier placement being Tier 2 or Tier 3, with a relatively modest co-pay for patients anywhere from, say, $50 to $70. And at $50 to $70 for six months of therapy, we think that represents good value for patients. For Medicare patients, we cannot offset their co-pay through any mechanism other than donations to a third-party independent foundation. Now moving on to the REMS, we say that we cannot eliminate the possibility of further downward pressure due to REMS. Because at this point, not all customers have enrolled in the REMS program. To date, customers representing about 80% of our clinic business have enrolled and customers representing about 50% of our hospital business have enrolled. If you look at Aranesp over the last three quarters and adjust for inventory and financial accrual, one-offs, we've been relatively stable, about $21 million per week. But again, because all customers haven't enrolled, we're cautiously optimistic in terms of our ability to maintain that.

Our next question comes from Maged Shenouda with Stifel, Nicolaus. Maged Shenouda - Stifel, Nicolaus & Co., Inc.: Can you just update us on your plans for DTC campaign for Prolia, and do you expect that, that will occur once the reimbursement pump has been fully primed?

We do think there is a role for DTC to make patients aware of new treatment options, encourage them to have those discussions with their patients. The timing is important. We want to make sure that physicians are comfortable with the product, they've used it, fulfillment issues have been worked out. And when we have a critical mass of receptive physicians, then we do intend to mobilize patients. Maged Shenouda - Stifel, Nicolaus & Co., Inc.: Any, I guess, narrowing or refining of the timeline there?

No. I think we'll get back to you as we continue to broaden our prescriber base. Obviously, we'll be looking at sometime in the middle to late next year to consider DTC.

And our final question comes from the line of Gene Mack with Soleil Securities.

Just on Prolia and the primary care docs, given your expectations prior to launch and the focus that you're maintaining on high prescribers, can you talk about maybe what your expectations for PCP reaction to the drug were prior to launch, and maybe where they are as a result of what you've seen over the last six months, and will that make you change anything that you're going to do? And then just real quick, maybe just a little bit more clarity on when the enrollment for AMG 479 and 386 will begin in Phase III?

On primary care, we're encouraged by their reaction to the product. There are no showstoppers in terms of the reacting to the safety profile, the efficacy profile, convenience, the value of the product. Right now, it's a matter of navigating the reimbursement hurdles. Again, we're making good progress on that, and we're confident that Prolia is a product for primary care physicians.

With respect to the Phase III programs, both the 386 and 479 Phase III programs are going forward. Of course, the work that's required is getting site approval and site initiation, et cetera, et cetera. But we do expect that we're going to be enrolling patients in both of those studies very soon. The 386 study probably beginning before the 479 studies and very soon.

Okay thanks, Roger, I would like to thank everybody for your participation in our call this afternoon. If you have any follow-on questions or comments, feel free to call us. The Investor Relations team will be standing by for several hours. Thanks again.

Ladies and gentlemen, this concludes Amgen's Third Quarter 2010 Financial Results Conference Call. You may now disconnect.